UK Housing Market Signals Tentative Recovery, RICS Reports

The UK housing market is displaying initial indications of a potential turnaround, as sentiments regarding sales and property values shift away from deep negativity, according to insights from the Royal Institution of Chartered Surveyors (RICS).

New Year, New Housing Market Optimism?

At the close of 2025, the real estate sector faced significant obstacles due to uncertainties surrounding potential tax increases outlined in the Autumn Budget, resulting in a noticeable decline in house prices during the year’s final months.

RICS members noted an uptick in new buyer inquiries during January, where the net balance climbed to -15%, marking an improvement from the -21% recorded in December and -29% in November.

Agreed sales mirrored this positive shift, achieving a net balance of -9% in the latest figures—the least pessimistic since June 2025.

Expectations for national house price growth seem to be steadying. Over the preceding three months, the net balance for price growth reached -10%, showing consistent progress from a trough of -19% in October 2025.

The report highlights that house price appreciation continues to perform best in Scotland and Northern Ireland, with encouraging upward movements also observed in the North West and Northern England regions.

Conversely, areas such as London, the South East, South West, and East Anglia are still trailing the national average, largely due to persistent affordability issues, as noted by RICS.

Looking forward, projections for sales in the next three months softened slightly to a net balance of +4%, yet they surged to +35% for the upcoming 12 months—the most robust figure since December 2024.

Simon Rubinsohn, RICS’s chief economist, commented: “Early indicators suggest that market conditions could be on the mend following a tough stretch, though overall activity remains restrained, pointing to a recovery that will unfold slowly.

“The robust 12-month outlook provides encouragement, but short-term forecasts stay somewhat muted amid lingering economic uncertainties. The evolution of this cautious progress into lasting momentum will largely hinge on mortgage rate trends and wider macroeconomic stability in the months ahead.”

Will House Prices Rise in 2026?

Optimism persists that declining mortgage rates could stimulate buyer interest and eventually drive house price increases.

Nevertheless, mortgage rates have trended upward in recent weeks, and the Bank of England maintained its rates in February due to elevated inflation levels, potentially curbing market activity in the immediate future.

This cautious stance is evident in the RICS survey responses, where expectations for house price growth remain negative for the next three months.

On a brighter note, +43% of respondents foresee price rises over the coming year, representing the most optimistic projection since February 2025.

Tom Bill, head of UK residential research at Knight Frank, observed: “Initiatives paused due to Budget announcements were reignited around the Christmas period, generating favorable demand indicators in the opening weeks of the year.

“That said, both buyers and sellers now navigate a volatile environment shaped by a prime minister whose tenure appears precarious. An impending leadership contest could disrupt sentiment temporarily, but long-term demand will be influenced by the economic agenda of any successor and whether receding inflation translates into lower mortgage rates.”